How Esports Teams Make Money?

[00:00] what do you think of when you visualize

[00:01] a sports tournament

[00:03] a packed stadium fit athletes battling

[00:06] it out for glory

[00:07] for decades sports tournaments have

[00:09] generally been a staple in the lives of

[00:11] many around the world

[00:12] from fifa world cups to nba games and

[00:15] qriket tournaments

[00:16] sports have always been associated with

[00:18] physical activity

[00:19] however in the last decade there's been

[00:21] an exponential rise in a type of sport

[00:24] that has generally been overlooked and

[00:26] undermined

[00:27] a sport that anyone from any part of the

[00:30] world could take part in

[00:31] this is the story of the rise of esports

[00:36] gaming is the fastest growing form of

[00:38] entertainment globally

[00:40] on its current trajectory we estimate

[00:42] the esports market will generate

[00:44] 1.8 billion dollars in 2022

[00:47] and the video game market itself will

[00:49] generate around 190

[00:52] billion dollars the top esports

[00:54] organizations are worth more than 200

[00:57] million dollars according to forbes and

[00:59] those evaluations have been climbing

[01:01] steadily so the money behind the scenes

[01:03] is there but the revenue streams for

[01:05] esports organizations are complicated

[01:08] and complex but before we jump right

[01:10] into the numbers let's take a look at

[01:12] what esports

[01:13] are and what pushed them to their

[01:14] current heights

[01:16] esports is the term used to describe

[01:18] competitive gaming with massive

[01:20] tournaments in games like

[01:21] league of legends dota 2 rocket league

[01:24] fifa

[01:25] and many more the la times says 8

[01:27] million people log on

[01:29] every day to take part and yet for some

[01:31] of us it still feels somewhat foreign

[01:33] and underground culture even

[01:35] the most played right now is dota 2 with

[01:38] prize money well into the nine figure

[01:40] mark and attracting thousands of

[01:42] participants

[01:43] and related tournaments the top dota 2

[01:45] tournament called the

[01:46] international had a prize pool of 40

[01:49] million dollars in its latest

[01:51] installment

[01:52] so how do these esports teams work and

[01:54] how do they manage to raise this

[01:56] enormous amount of money

[01:57] let's take a look put simply esports are

[02:00] electronic sports

[02:02] organize competitive gaming events in

[02:04] various leagues with teams and players

[02:06] battling

[02:07] out for victory intel started pushing

[02:10] esports with the first intel extreme

[02:12] masters gaming tournament back in 2007

[02:14] at cebit worldwide viewership of esports

[02:18] competitions

[02:19] has helped push popularity into the

[02:21] mainstream to the point that

[02:22] intel has even tried to get esports

[02:24] officially recognised by the

[02:26] international olympic committee by

[02:28] bringing season 12 of the intel extreme

[02:30] masters

[02:31] to pyeongchang during the 2018 winter

[02:33] olympics

[02:34] event attendance at the big stadium

[02:36] competitions is increasingly on the rise

[02:38] as fans make an effort to watch their

[02:40] favorite teams compete

[02:42] but online viewing is increasing too a

[02:45] survey in china revealed 45

[02:47] of the adults there had watched esport

[02:50] at some point

[02:51] but what attracts so many people to this

[02:53] supposedly

[02:54] niche field james dean ceo of esl

[02:58] uk explains esports has no barrier to

[03:01] entry

[03:02] if you're a gamer you're a gamer if you

[03:04] want to step up your game and play in a

[03:06] competition

[03:07] you can do so if you're really great and

[03:09] you practice a lot you might be on a big

[03:11] stage winning a million dollars

[03:13] and that's open to everyone in the large

[03:15] part it's about making opportunities for

[03:17] anyone

[03:18] to do anything but where does this money

[03:21] come from

[03:22] like a lot of sporting events ninety

[03:24] percent of the revenue in esports

[03:26] is sponsorships and advertisements these

[03:29] revenue streams include sponsorships in

[03:31] exchange for advertisement on the

[03:33] player's jerseys

[03:34] similar to those of traditional sports

[03:36] for example the energy drink brand red

[03:38] bull and the smartphone company htc

[03:41] have jersey sponsorships for cloud9 a

[03:43] legacy esports team

[03:45] these sponsorships allow companies to

[03:47] gain nationwide recognition

[03:49] and potentially international

[03:50] recognition as well if the esports team

[03:52] qualifies for international tournaments

[03:56] in the digital age esports teams allow

[03:58] sponsors to target

[03:59] demographics that have been

[04:00] traditionally difficult to reach through

[04:02] standard marketing tactics

[04:04] millennials typically watch less

[04:06] television and listen to the radio less

[04:08] often than older demographics

[04:09] increasing the importance of social

[04:11] media marketing

[04:13] players and sponsors will typically

[04:15] collaborate on advertising campaigns

[04:17] dr pepper has a long history in esports

[04:19] gaming with partnerships dating all the

[04:22] way back to mlg in 2008.

[04:24] as such they know how to get a good

[04:26] response out of the esports audience

[04:28] and can serve as a case study for other

[04:30] brands who want to get involved

[04:32] in addition to the team soda mid ad dr

[04:34] pepper

[04:35] also received a lot of press by

[04:36] featuring tsm fortnite players on

[04:38] bottles of soda

[04:40] coupled with this is the merchandise

[04:41] sales of the team's jerseys and

[04:43] mostly gaming oriented items like

[04:46] controllers or mouse pads

[04:47] teams take various approaches such as

[04:50] the 100 thieves a new team formed in

[04:52] 2018

[04:53] which uses a hyper beast style of

[04:55] merchandising with high prices

[04:57] and limited quantity this has been very

[05:00] successful for them

[05:01] with apparel selling out within 20

[05:02] minutes of release

[05:04] in november 2017 former professional

[05:06] gamer matt nadeshot haig

[05:08] took to his youtube channel to announce

[05:10] that his apparel company 100 thieves

[05:12] received a multi-million dollar

[05:14] investment from cleveland cavaliers and

[05:16] quickened loans owner dan gilbert

[05:18] allowing him to expand into a

[05:20] full-fledged esports

[05:22] organization was funded by hip hop star

[05:25] drake

[05:26] and scooter braun who represents famous

[05:28] artists like justin bieber and ariana

[05:30] grande

[05:32] however merchandise will always be a

[05:34] comparatively lesser portion of the

[05:35] total revenue

[05:36] this is mostly due to the fact that

[05:38] fewer people watch esports tournaments

[05:40] in person at a stadium

[05:42] so they might not have the same

[05:43] dedication to purchase jerseys to show

[05:46] support like you would in other sports

[05:48] third

[05:49] we have content creation and streaming

[05:51] almost every serious gamer professional

[05:54] or amateur can stream on twitch to an

[05:56] audience of potentially millions every

[05:58] single stream

[06:00] this is a great way to get started and

[06:02] on the route to professional gaming

[06:04] with advertisement revenues on each view

[06:06] the teams can keep funding high quality

[06:08] videos

[06:09] teams like team liquid take this onto a

[06:11] higher level by partnering with one up

[06:13] studios

[06:13] an esports production company showing

[06:15] just how much care they put into this

[06:17] sector

[06:19] not only is this a source of revenue it

[06:21] attracts other people who like the game

[06:23] to your team

[06:23] and increases the fan base finally

[06:27] one of the most significant sources of

[06:28] revenue an indicator of how good the

[06:30] team is

[06:31] is the prize pools the winners receive

[06:33] at any tournament

[06:34] prize money in esports is increasing at

[06:37] an incredible rate

[06:38] while prize pools are mounted to a mere

[06:40] couple of thousand dollars at most in

[06:42] the past

[06:43] they now reach several million dollars

[06:45] for large competitions

[06:47] the winner of the 2019-14 world cup

[06:50] booger

[06:50] received three million dollars as a

[06:52] prize however what most don't realize is

[06:55] all the money

[06:56] often doesn't go to the players but

[06:58] instead to the team

[06:59] which is generally owned by someone else

[07:01] and the players are employees like in

[07:03] any other sports team

[07:05] however with the increase in viewership

[07:07] and the prize money there's a lot to be

[07:09] made as a player too

[07:11] how does one get started in this that's

[07:13] the best part

[07:14] the barrier to entry is very low all you

[07:17] need is a computer

[07:19] and an internet connection and the world

[07:21] is your oyster

[07:22] most games like dota 2 and league of

[07:24] legends don't even require

[07:26] too high of computer specs to get

[07:27] started so anyone can get started and

[07:30] play

[07:30] you can either take part in local

[07:32] tournaments that happen near you

[07:34] or play online and go up in rank anyone

[07:36] can stream for free on twitch and

[07:38] youtube to gain viewers and build a

[07:40] following

[07:41] esports are on the rise but they're

[07:43] still at an infant phase with respect to

[07:45] other well-established sports

[07:46] organizations in terms of viewership and

[07:49] money

[07:50] the best time to get into esports would

[07:52] be right now

[07:53] thanks to the internet while not

[07:55] everyone can make a full-time career out

[07:57] of it yet there's a lot there for some

[07:59] side money and grow to make it your

[08:01] full-time job if you get good at it

[08:16] you